MANILA, Philippines—The Bureau of the Treasury (BTr) plans to raise P200 billion from the domestic debt market in April despite lingering high yields sought by local creditors.
In a March 29 memorandum to government securities eligible dealers (GSEDs), National Treasurer Rosalia de Leon said the BTr will auction off P15-billion each in short-dated T-bills during the four Mondays of next month, or a total of P60 billion.
Similar to previous months’ issuances, P5-billion each will be offered across the three treasury bill tenors — the benchmark 91-, 182-, and 364-day.
On the four Tuesdays of April, the BTr will offer P35-billion each in bonds, or a combined P140 billion in longer-term debt paper.
On April 5, the BTr will auction off three-year treasury bonds; four-year on April 12; seven-year on April 19; and 10-year on April 26.
De Leon early this week said the BTr will mostly include T-bonds in the belly of the curve, or those with intermediate maturities of three to seven years, in its April domestic borrowings program, as these appealed the most amid jittery markets.
While domestic creditors were seeking higher yields amid the Ukraine-Russia war and expectations of above-target inflation locally, De Leon had said she hoped bond market participants would “become reasonable, especially with bids for treasury bills.”
T-bills in the short end of the yield curve were being most impacted by elevated inflation, projected by the Bangko Sentral ng Pilipinas (BSP) to average 4.3 percent — above the 2-4 percent target band of manageable year-on-year consumer price hikes.
The BTr plans to introduce an “amortizing bond” this year to maintain demand from GSEDs who were wary of long debt exposure amid climbing interest rates.
Last Tuesday’s auction for P35 billion in reissued 10-year bonds was the BTr’s first fully awarded fund-raising since tensions at the Ukrainian-Russian border escalated into a full-blown war in late February. Earlier in March, the BTr rejected all bids for the IOUs it offered. In recent weeks, it only partially awarded T-bills and bonds to cap the high yields sought by GSEDs.
The Philippines relies more on locally sourced borrowings to take advantage of oozing liquidity in the financial system while tempering foreign exchange risks. Three-fourths of the P2.2 trillion that the government had programmed to borrow this year will mainly come from the issuance of treasury bills and bonds.